A Nobel Prize winner in economics just backed basic income

REUTERS/Dominick Reuter
Basic income is having a whirlwind year, and it was just galvanized even further by the support of Angus Deaton, the 2015 Nobel Prize winner for Economics.

At a universal basic income forum in Taiwan's capital on May 19, Deaton encouraged governments to consider lifting the financial burden on low-income citizens with basic income grants, the Taipei Times reports.

He pointed to increasing instability as a cause for concern.

"The riskier the world becomes, the more potential there is for increases in inequality," he said.

His thinking: Government intervention on the scale of regular monthly checks, handed to people regardless of working status for the purpose of meeting their basic needs, may be the smartest solution.

In the past, Deaton has firmly supported the idea that wealth inequality will only continue to increase unless some larger safety net acts as an insurance agent to bind people together. He won the 2015 Nobel Prize for his analysis of consumption, poverty, and welfare. His research has focused on the ways people's individual choices intersect with larger, macro-economic outcomes.

Many basic income advocates see the system as a natural fit in a country like the US, where the richest 10% own more than 75% of the total nation's wealth, and the top 20% own 90% of all wealth.

People who support basic income see it rebalancing people's wealth by uplifting those who can't meet their basic needs. In a basic income-driven system, people could use their monthly allowance to cover expenses like rent, clothes, and groceries — things they might not otherwise have the cash to cover at all.

By far the biggest experiment, however, will be the one launched by the nonprofit GiveDirectly later this year. Encompassing more than 6,000 people in East Africa, the organization will provide a universal basic income for a period of roughly 10-15 years.

It'll be the largest experiment in history and could serve as the gold- standard in basic income research, ultimately turning a somewhat niche hypothesis into a full-fledged economic model.